European Equities: A Lack of Stats Leaves the Majors in the Hands of the News Wires

The gains came in spite of the continued spread of the coronavirus across Europe and a marked increase in deaths in Italy.

The Stats

 

It was a particularly quiet day on the economic calendar on Thursday, with no material stats to provide direction on the day.

 

From the U.S, a jump in the weekly jobless claims to 281k and a slide in the Philly FED Manufacturing Index to -12.7 for March were largely brushed aside.

 

It was ultimately all about stimulus on the day, with the U.S Government also in action.

The Market Movers

 

For the DAX: It was a mixed day for the auto sector. Volkswagen bucked the trend, with a 0.96% gain on Thursday. It was bearish for the rest of the pack, however. Continental and BMW led the way down, with losses of 5.96% and 3.65% respectively. Daimler saw a more modest loss of 2.12% on the day.

 

It was also a bullish day for the banks, with the ECB’s asset purchasing program delivering much-needed support. Commerzbank rallied by 7.2%, with Deutsche Bank up by 7.55%.

 

Deutsche Lufthansa also found much-needed support, rising by 3.61% to reverse Thursday’s 2.57% fall.

 

From the CAC, it was a mixed day for the banks. BNP Paribas rose by 2.97%, while Credit Agricole and Soc Gen fell by 0.35% and by 2.54% respectively.

 

It was also a bullish day for the auto sector, however, with Peugeot and Renault rising by 4.97% and by 2.15% respectively.

 

Air France-KLM rallied by 7.04%, with Airbus SE rallying by 9.51%. From the Dow, Boeing continued to see red, however, falling by 4.10% on the day.

On the VIX Index

 

The VIX fell by 5.82% on Thursday. Reversing a 0.71% gain from Wednesday, the VIX ended the day at 72.0.

 

U.S Government moves to ease the impact of the coronavirus delivered support to the U.S majors.

President Trump signed into law free coronavirus testing for Americans, and more importantly, sick leave pay.

 

There is also the anticipation of the U.S administration delivering cash payments and low-interest rate loans to small businesses amongst other measures.

 

The VIX held onto 70 levels, however, as the number of cases in the U.S continued to rise. At the time of writing, the total number of U.S cases stood at 13,800, with 4,621 new cases and 214.deaths reported.

 

On the day, the S&P500 gained just 0.47% to trail the Dow and the NASDAQ, which rose by 0.95% and by 2.30% respectively.

 

The Day Ahead

It’s another quiet day ahead on the Eurozone economic calendar. German’s February wholesale inflation figures are due out ahead of the European open.

While the numbers tend to have a relatively muted impact on the majors, any marked fall in wholesale prices will be another red flag.

We won’t expect a material impact, however. Next week’s private sector PMI and business and consumer sentiment figures will be of far greater influence.

From the U.S, February’s existing home sales figures will also be brushed aside. March and April numbers are likely to garner greater interest.

Ahead of the European open, the PBoC is in action. The markets are expecting a further cut in loan prime rates.

Ultimately, expect the news updates and any further moves by central banks and governments to be the key drivers. At the time of writing, the number of coronavirus related deaths in Italy alone surpassed that of China. The death toll rose to 3,405. In spite of the containment measures and border shutdown, there were 5,322 new cases, taking the total to 41,035.

When also considering 18,077 cases in Spain, 15,320 cases in Germany, 10,995 cases in France containment measures are likely to become even more stringent to attempt to slow the spread.

In the futures markets, at the time of writing, the DAX was down by 41.5 points, with the Dow down by 190 points, the losses modest by recent standards.